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May 14, 2010

Former Attorney General sues city over Wilmanor Apartments; Lautenschlager representing Spodick in case

Jim Spodick is taking his $650,000 claim against the city to court, and he has a big-name attorney by his side.

Former Attorney General Peg Lautenschlager filed a lawsuit in Racine County Circuit Court Thursday claiming the city reneged on a deal to knock $200,000 off of a mortgage on a low-income apartment building that Spodick had turned around. The complaint alleges Spodick had a deal with former Mayor Gary Becker and City Development Director Brian O'Connell to reduce the mortgage, but the city backed out just before Spodick was to sell the property.

Lautenschlager, who served one term as Attorney General, now works for the Madison-based law firm Bauer & Bach. Daniel Bach, one of the lead partners, is a Racine native.

The suit was delivered to City Hall on Friday and the case has been assigned to Judge Richard Kreul.

Here's the key graph:

That in 2008 and 2009, Jim Spodick had several conversations with city officials regarding the amount required to pay off the loan. Gary Becker, who serve as mayor of the City of Racine, and Brian O'Connell, who served and serves as Director of City Development, promised Spodick the mortgage payoff amount would be reduced from $675,000 to $475,000 if Spodick could find a buyer for the property.

The city has 20 days to respond to the claim. Kreul will then decide if the case can proceed to trial.

To recap, the deal surrounds a mortgage Spodick took on in 2006 for the Wilmanor Apartments at 255 N. Memorial Drive. At the time, the low-income apartment building had been through at least three professional management companies, but was deteriorating quickly due to unpaid rent and crime. Becker, knowing Spodick through his work on low-income apartments on West Sixth Street, asked Spodick to takeover the building in hopes of avoiding a default on the mortgage. The default would have been costly for the city because it had received low-income housing tax credits for the property. If the building failed, the city would have had to pay the money back to the federal government.

Spodick and his wife took over management of the building, spent several hundred thousand dollars on renovations, managed the problem tenants and made the apartments profitable. After stabilizing the building, Spodick looked to sell the apartments with the understanding that the city would reduce the mortgage on the property by $200,000 to compensate Spodick for part of the renovations. (Incidentally, it was almost a fluke the city got any money back on the property. Two banks dismissed over $2 million in loans on the property - well more than the apartments were ever worth. The city then fell into first position on the loan, allowing them to collect when Spodick sold the building.

In the lawsuit, Spodick claims he went ahead with a sale assuming the city would reduce the $675,000 mortgage by $200,000. When the city refused the deal, he was on the hook for the money, which cost him an opportunity to buy another building. Spodick is claiming he lost $450,000 because he was unable to complete the purchase.

After the council rejected his request to reduce the mortgage, Spodick filed a claim against the city. The council rejected the claim on Nov. 17, opening the door for Spodick to sue the city.

He'll have a tough case to prove. City Council members argued in November that even if Becker or O'Connell made the deal with Spodick, the council has to give it final approval. But he can also tell a good story about how he helped turn around a problem building and preserved its low-income tax credits, only to lose money in the end.

The wild card may be Becker, who, despite being in prison, could testify in the case. If Kreul allows the case to proceed, Lautenschlager and Spodick may call him to verify their claims of a handshake deal on the property. Then again, it's hard to say how much credibility the former mayor would have under oath.

51 comments:

The wild card is not Becker but the fact that Dickert had the board vote secretly via email and alter the meeting minutes retroactively. If that was not done then Spodick would probably not have a case. This is another case of the cover up causes the damage, not the actual act, and the taxpayers are on the hook.

Got to love this John Dickert will cost this city quite a bit of money. Hey John take over CAR 25, if you want make it the John is GOD network, it will not keep you out of court nor will it save you from being tossed out of office. Hell, this is more fun then watching Gram Norton!

Don't sell this short. Look at all the secret deals that have come out of the woodwork the past few years. They all seem to be found to be true as time passes. All the deals seem to have two names attached. The same two included in this suit. I would think there is a pretty solid case to this law firm to be involved. I wonder how more of these still have to surface.

Interesting how Racine bought up all the land they could to open the view of Lake Michigan and preserved it as public space. Then in last 20 years the mind set has focused on greed and how can we develop it into a place for Rich to have condos.

I guess Pooh pooh to the average folks! It's the deep pockets that can enjoy the Harbor views.

I just wonder what kind of taxes they pay on Gas Light Point. I'm sure there was some deal cutting there! I'll bet 10 cents on the dollar compared to regular house taxes.

The land would have been bought and payed for without tax payers money!

Samuel C. Johnson gave the Heritage Museum 1.4 million to buy the site. But the Scott Fergus deal and his good old boy crap -- killed it.

Then you had a moron who said -- Hey! We got a old garbage dump down buy the old Elk's Club. How about that? It's right downtown! Oh boy ----- what a deal.

Racine is a ghost town because of men like John Dickert and his pals and the looting they have done to our city. Pointe Blue will be the Grande Finale for Dickert. He will not listen to the citizens of Racine and continue on his path of spending. He will empty racine's coffers shortly before leaving politics and live a wealthy life. Pointe Blue is his golden ticket and count on him to redeem it.

Dickert tried to steal the Zahn's building from the little kids that collected pennies for two years in order to build himself a "boutique hotel". Unfortunately, the children didn't collect enough pennies and the Dickerts couldn't build their hotel with the first graders lunch money. To say Dickert had nothing to do with it is a pile of crap.

This is the 1st time I've posted, but had to. Stop the ridiculous lies. I know for a absolute fact that Dickert never tried to "steal the Zahn's building". He was one of the biggest supporters of the children's museum. He had nothing to do with the deals death. He tried everything to save it. He still would love to have one. There are more lies, but I'll stop at this one.

Just tell me what Dickert has accomplished? What is he priding himself on? The guy is a huge failure, as is his counterparts Freidel and O'Connell, LOSERS, and the exact reason why this city is in the state it's in. Ask a Dickert supporter "if there are any" ...what has he accomplished and you'll get the same dumb blank stare.

I have to admit, that I had to deal with your Mayor Dickert recently and the only word that comes to mind is he is a "snake". I would not trust him one bit.

He has personal motives, and they are not in the best interest of your fair city.

Unfortunately your Mayor Becker was on the right track and had a great vision for Racine's future; but greed and devil got the best of him too.

It does not help this city that it's school district is corrupt as well. You have so many great assets, but in order for any city to thrive it must have great schools. Your school district administration is more interested in themselves and Sports than Academics. That is very apparent by the way it has spent it's referendum monies and by how they have allowed one of the best schools in the state if not the country to completely decay away. You should all be embarrassed.

Why would any business want to open shop here?

The Racine Community needs to take control! Fix your schools, fix your politics and be more business friendly. Open your arms to new business and get your heads out of your A%$. Your community makes it so difficult to expand here that Kenosha and Oak Creek are taking complete advantage of you.

Screwing is what the Dickerts do well. Ask him how many families that his "Uncle Jim" took down the tubes when he bankrupted at Jamestown. "Team Dickert" remember that? Birds of a feather flock together.

It sucks to be so harsh on these guys, but they really do deserve to be ousted. I mean would YOU do business with Dickert or Freidel? I don't think so. People are sick and tired of being lied to and sick and tired of the sheer arrogance of both of these guys. It's a severe loss to this city to have these people in charge and I do agree, if they cared about the city and it's people they would just resign. They have done nothing but be unethical and unprofessional for the past year.

"Johnnie Boy" has uncle Jimmy found the 10k that he screwed me out of 19 years ago or is he still looking for it? Seems that one anonymous poster knows about this group and how they use people up, drag them out and then eventually just "F" them over. The Dickert name is not one of high moral or ethical standards, trust me I know first handed.

Back to this lawsuit - It was the meeting in secret by the loan board and the cover-up by changing the minutes of the meeting that will cause the City to lose this lawsuit. About time they learn a lesson...

Dickert thinks that everyone buys into his BS. He thinks that people believe his words and never pay attention to his actions. Dickert is a scumbag and double-talker. He is a liar and a cheater and always has been. He will scam this city down to its knickers. He had everything to do with the Spodick case and you will see that he has had everything to do with many other fiascos.

If, in fact, there is anything on tape with city officials agreeing to the $200K discount, it will be interesting to see if the court recognizes that as a verbal agreement in lieu of a signed contract. I would certainly hope not, in view of the fact that it is something the city council should have ratified. Otherwise it could set a precedent for the mayor to make legally binding deals without the consent of the city council.